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World Cup kicks media

Cup runneth under for nets

The 2002 World Cup soccer tournament, which wrapped June 30 with Brazil beating Germany 2-0, drew up to 500 million TV viewers around the globe.

But in the aftermath, broadcasters worldwide are mulling the astronomical costs of buying the rights and asking themselves one vital question: Did we win or lose on the deal?

In most cases it seems to be a draw, with commercial webs breaking even — but only just — while pubcasters and payboxes claim to be happy with the kudos that coverage brings.

Teutonic media conglom the Kirch Group paid global soccer org Fifa $905 million for the rights to the 2002 and 2006 tourneys. It sold them on for $1.87 billion, more than quadruple the pricetag of the previous three tourneys combined. (That wasn’t enough to stop it from going bankrupt last month.)

It marks a trend that has seen the cost of soccer rights spiraling out of control. The huge pricetags for national games have already contributed to the downfall of payboxes ITV Digital in the U.K. and Telepiu and Stream in Italy.

But while all the Euro broadcasters balked at Kirch’s World Cup demands, they coughed up.

In Germany, pubcasters ARD and ZDF paid an estimated $97 million- $110 million; France’s commercial channel TF1 ponied up $145 million for exclusive rights, which includes matches from the 2006 tournament.

In Blighty, commercial giant ITV and pubcaster BBC paid $226.3 million. In Spain, Telefonica’s Via Digital bought exclusive rights for $162 million and sold on terrestrial rights to Telefonica’s Antena 3 for $47.6 million.

In Latin America satcaster DirecTV Latin America paid $400 million for exclusive rights to the 2002 and 2006 cups for Mexico, Argentina, Venezuela, Colombia, Chile and Uruguay, but it had little luck sublicensing the rights and admitted it lost on the deal.

“The Fifa World Cup is clearly the most important sporting event in the world and extremely important in our markets,” said DirecTV Latin America chairman Kevin McGrath. “But economic turmoil in Argentina, Uruguay, Venezuela and Colombia, including the collapse of the currencies and advertising markets, resulted in a situation which was non-economic for DirecTV Latin America.”

Most broadcasters hoped to make the money back with hefty ad rates. Clive Reed, director of television for media planning firm ZenithOptimedia, estimated that a 30-second spot for an evening England match would be $263,000 in Blighty; in Germany, a 30-second spot featuring the national team was up for $124,000.

The outcome of broadcasters’ megabucks gamble also depended on how well the national team did in the tourney.

In France, TF1 saw its share price dip when the national team — the previous Cup winner — was knocked out in the first round. The Gallic web planned to charge $191,000 for a 30-second spot at halftime during the final if the French team was playing. That dropped to $86,000 after the team’s exit.

Ad sales shot up 30% in Argentina during “15 days of euphoria for broadcasters America TV and Canal 7,” according to Diego Abadie, client services manager of Media Planning Argentina, a media-buying unit of Havas. But ad sales “dropped drastically” when Argentina went out in the first round, he said.

Advertising on Germany’s ARD was lower than expected as commercial rivals ProSieben, Sat 1 and RTL cut TV spot prices during the month-long World Cup tourney, hosted by Japan and South Korea.

More than 26 million people, an 88% aud share, watched the Germany vs. Brazil finals — below the highest German TV audience ever of 33 million for the European Cup final in 1996.

TV Globo in Brazil, the eventual winner of the Cup, bought exclusive rights for $150 million. “TV Globo did not make a loss on the event, because, besides sponsorship, it managed to increase the sale of ad space,” spokesman Luis Erlanger said in explaining the event’s appeal. “But the Cup’s impact cannot be measured just by taking into account the sale of advertising. TV Globo has a commitment to sport events with Brazilian participation.”

TV Globo has the rights to the 2006 World Cup but is trying to renegotiate the agreement inked in 1998. “The talks have not started yet,” Erlanger said. “The price of sports rights has fallen everywhere in the world, and we are considering offering $50 million for the 2006 Cup rights.”

Losses on this World Cup will mean that prices paid for the next are leaner and meaner. In fact that’s already happened.

Italy’s Via is widely thought to have overpaid for the 2002 Cup. Earlier this year it complained to Kirch that the games could be seen free of charge in Spain on Astra owing to overspill from Germany’s ARD and ZDF.

Its complaint helped it barter down rights with Kirch for the 2006 World Cup rights to $114.3 million.

It also introduced an important rider to the deal: a mark-down if Spain did not reach the quarter-finals. Such a deal would have saved TF1 a fortune.

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